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Deduction of Travel Expenses

Definition

The IRS allows travel deductions only for "ordinary and necessary expenses of traveling away from home" for business purposes. This means that if a person stays in particularly lavish accommodations he cannot deduct these costs, as these are not necessary.

Personal Vacations

Many people think that if they take a personal vacation but engage in some business that they can deduct the entire trip's cost. However, this isn't the case. The IRS allows filers to deduct a trip's cost only if the primary reason for travel is business, and even if this is the case, tax payers must not deduct the expenses incurred during personal time, even if this is as little as several hours out of the trip.

Determining Tax Home

The IRS also only allows travel deductions when a person is away from his tax home. If a person routinely spends time in more than one place, the location where he spends the majority of his working time is his tax home.

Reimbusement

If a company reimburses expenses for traveling, then these expenses cannot be claimed on personal taxes, as they no longer qualify as a tax deduction. Unreimbursed expenses are reported on Form 2106, which is carried over to form 1040 and are limited to 2 percent of adjusted gross income for those people who itemize deductions.

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